On March 15, 2021, Ed Wilson was quoted in PYMNTS on the creation of sovereign digital currencies. According to the article, U.S. Treasury Secretary Janet Yellen said last month that central banks should explore creating and issuing sovereign digital currencies. The hypothesis is that such currencies—digital dollars among them—could create “faster, safer and cheaper payments,” she said at a virtual conference. Yellen noted that among the many things to consider is how regulators would “manage money laundering and illicit finance issues.”
Wilson said the rise of cryptocurrencies demands advanced technologies to close the gap with financial criminals. The opportunity to have money on an undisputable and never-forgotten ledger would increase transparency and fairness. With ethical companies and cutting-edge technology, crypto could be the way to a new world order in anti-money laundering (AML), characterized by fairness, efficiency, and accountability.
Wilson believes digital dollars can address the need for a central bank digital currency (CBDC) and more security around the general area of cryptocurrency. While existing electronic payment mechanisms work on an account-based model, the digital dollar differentiates itself as a token, combining cash-like properties with many of the benefits of the existing account-based payment mechanisms.
But Wilson agrees with Secretary Yellen that there are a lot of issues yet to be addressed. One is whether the CBDC will be used at the wholesale or retail level. This will influence a host of business, central bank, and regulatory issues. Another is that real-time settlements will drive anti-money laundering and other account-based compliance systems toward incorporating artificial intelligence and away from rules-based structures, which take too long and generate a large number of false positives.